World Bank unit to set up $500m Mena fund

Dubai, June 11, 2012

The World Bank is hoping to raise a $500 million fund to invest in the Middle East and North Africa (Mena), saying that the region's needs in the wake of the Arab Spring uprisings are more than it can manage itself.

International Finance Corp, a unit of the World Bank, is setting up the fund in addition to the $2.2 billion to $2.4 billion it expects to invest in the region over the next year, aiming to take advantage of a surge in investment opportunities since the Arab Spring, its regional director said on Monday.

'We've invested $2.4 billion in the past 12 months in Mena countries and expect to do the same range next year,' Mouayed Makhlouf, regional director for IFC in the Middle East and North Africa, told Reuters.

'We see an increase in equity investment opportunities and working capital needs in countries like Morocco, Tunisia, Egypt and Jordan,' he said, adding that the revolutions in the Arab world have brought renewed attention to the economic and political consequences of unemployment.

IFC, which invests in developing the private sector in emerging economies, provides loans, equity investments and advisory services to companies, with a special focus on small to medium-sized enterprises.

'We've realised that the need for investments in the region after the Arab Spring is more than we can support, so we're now starting to manage third-party money,' Makhlouf said.

IFC will provide $100 million of seed investment for the new fund, which is expected to have a first closing within the next three months. It hopes to attract institutional investors, sovereign wealth funds and development agencies.

The corporation has invested $3 billion in the Mena region since the Arab Spring, Makhlouf said, becoming an important conduit of capital for companies that have been adversely affected by unrest in the region.

'Demand for financing is huge now, much bigger than before the Arab revolution,' Makhlouf said, noting that Libya is one of the countries IFC is planning to enter once security issues are sorted out.

The IFC, along with the Islamic Development Bank (IDB), said in April that it plans to invest up to $100 million on major infrastructure projects across the Middle East and North Africa. The institutions are contributing $50 million each to the Arab Infrastructure Investment Vehicle, which is part of the Arab Financing Facility for Infrastructure (AFFI), a joint initiative of the World Bank, IDB and IFC.

In the past 12 months, the IFC invested $506 million in Egypt in seven transactions, Makhlouf said, with between $200 million and $300 million earmarked for the country before the end of the year.

The IFC also provided a $50 million loan to cement and construction materials supplier Lafarge last year to support the French company's cement subsidiary in northern Iraq and spur the country's post-conflict economic recovery.

It made a $50 million equity investment in Orascom Construction Industries and agreed to lend $200 million to its subsidiary Egyptian Fertilizers Company in July last year.

IFC also agreed in December to invest up to $110 million in Jordan-based Hikma Pharmaceuticals to help to improve access to high-quality generic medicines in the Mena region.